Housing Subsidy

I am grateful for the opportunity to raise in the House the issue of housing subsidy. I look forward to the Minister's response to our short debate on important issues that are of concern to my constituents, particularly those who pay rent to my local council.

Tenants in my constituency want a decent home, but at present far too many of them do not have one. I shall illustrate what I mean. Recently, I had the opportunity of visiting tenants on the Chaucer estate in my constituency. Tenants on the estate, especially in Chaucer house, showed me the water coming into their flats through the windows, the electrical, plumbing and heating systems that need to be renewed, the roofs that need repairing and the poor lighting and security systems that need replacing. Tenants on the Collingwood estate, especially in Balaam house, need much of the same work done to their block. Very simply, when it rains they want the rain to stay outside and not to come into their flats.

People living on the Shanklin and Benhill estates want control of their heating costs, but above all they want new windows. The list could go on. Too many of the council homes in my constituency fail to meet the decent homes standards we all want everyone not just to aspire to but to enjoy.

Unfortunately, my hon. Friend the Member for Carshalton and Wallington (Tom Brake) cannot be in the Chamber this evening, but he very much supports the sentiments I am expressing. If he were here, he would want the Minister to be aware of the St. Helier estate in his constituency, where 800 box bathrooms were installed more than 40 years ago, to the delight of tenants at the time. They were meant to last only for 15 years, yet they are still there today. Furthermore, they are becoming a nightmare for the tenants, not just because they are coming away from the houses but because they are also full of asbestos, which might have been thought appropriate building material 40 years ago but, as we know, is no longer acceptable.

My purpose in seeking the debate is to ask-even beg-the Minister to do whatever he can to unlock the funds of £120 million allocated to Sutton by the Department for Communities and Local Government, and to do it now because the need is so great and so urgent-really urgent in the case of the box bathrooms. Against that background of need for investment in decent homes, council tenants find it hard to believe that so much of what they pay in rent does not stay in the borough.

A tenant in my constituency paying rent to Sutton council might reasonably expect the rent to go towards maintaining their home and providing services for themselves and their neighbours who are council tenants, as would any tenant anywhere. It should be clear to tenants who is accountable for setting the rent they pay and who is responsible for the quality of housing and services they receive.

Good government requires accountability, and accountability requires transparency. It should be easy for people to understand where the taxes and rents they pay go, but that is not the case with municipal rents. The current system is complex, unfair and unjust; even the language is obscure and hard to follow. Just what is a negative housing subsidy?

In hard cash terms, negative subsidy means that in the coming year tenants in my constituency and the borough of Sutton as a whole will contribute £10.5 million in rent to the Treasury. That is on top of £9.8 million in the current year. In effect, tenants in Sutton, Cheam and Worcester Park pay their rent to the Treasury from 1 April until some time in the middle of August. To put it another way, 38p in every £1 of the rent they pay goes back to the Treasury as negative subsidy.

When I meet tenants and particularly when I meet the Sutton Federation of Tenants and Residents Associations and its chair, Jean Crossby, they and she want to know where is the justice in the system. Why is their rent not spent entirely on their housing needs or on the needs of their local community?

It is no surprise that the figures for the 28 housing stock-owning Greater London boroughs have been analysed, and the Minister would expect me to rehearse the figures with him this evening. The analysis reveals that, on a per household basis, tenants in the London borough of Sutton are paying the highest negative subsidy in Greater London. Sutton tenants have been paying the Treasury for so many years that the council's ability to provide a good management service to its tenants and properly maintain their homes has been badly compromised.

In an answer to a question that I asked the Minister recently, he said that decisions on rents are matters for each local housing authority. I do not dispute the fact that that is true in some ways, but I shall explain why it is not entirely the case. The way that the subsidy and negative subsidy system works drives local rent-setting decisions, first, because the system allows the Government to redirect what they calculate to be excess resources in one locality to areas in other parts of the country that they calculate have a shortage of resources and, secondly, because the Government's policy of rent convergence with housing association rents has resulted in above-inflation increases in Sutton since 2001.

This coming year in Sutton, rents will increase by 6.27 per cent. on average, in accordance with the Government's guidelines and the formulae laid down in them. That will hit families very hard. It is particularly ironic, given the Government's determination to encourage local authorities to set the lowest council tax that they possibly can, with some success across the country, but the direction of travel on rents is the opposite.

Research by my local arm's length management organisation-the Sutton Housing Partnership-has found that 44 per cent. of tenants do not receive housing benefit and will therefore pay full rent. One in three of those families have children under 16. The Government have a very laudable and certainly well supported target of halving child poverty. Given that those families often live just above the measure of poverty that would tip them into receiving housing benefit, it is hard to understand how the Government's rent policy and subsidy system support that goal of halving child poverty.

I appreciate that the Department has been conducting a review. Indeed, I met one of the Minister's predecessors a couple of years ago, and we were pleased that the then Minister indicated that the review would be commenced. I understand that it might be published in April. I hope that the Minister will confirm the timetable for the publication, promulgation and implementation of its findings and recommendations, but no matter what is decided and what the Government choose to do, it will take time to have effect.

The Sutton Federation of Tenants and Residents Associations tells me that, while it waits for those decisions to be made and the changes to be implemented, there should be no further increase in the amount that tenants pay to the Treasury. That is not an unreasonable point, and on the association's behalf I ask the Minister to say in his response whether the Government will seriously consider freezing negative housing subsidy at 2008-09 levels-if not, why not?-until the review is concluded and acted upon.

Of course, this is not just about redistributing rental income from one poorish set of tenants to an even poorer set of tenants, to benefit their area because it does not have enough resources. The Treasury is a net beneficiary of the system; it pays out less in subsidy that it gets back in negative subsidy. Indeed, in 2008-09, the Treasury pocketed £200 million of tenants' rents. What is happening to that money? Where is the transparency that will allow us to see what is happening with it? Where is the accountability?

I am told that, by 2011, the Treasury will profit from the housing subsidy system to the tune of £400 million, and nothing in the system as currently conceived and implemented will stop that rising still further. In that sense, I agree with the Local Government Association and many others who say that the current system is not fit for purpose.

The current system leaves vital local services such as the building, repair and maintenance of council housing starved of cash. All the money in the housing system should be spent on homes and related services. The current system undermines local decision making, and makes it hard to hold local councillors to account for their actions; they could argue, and with some legitimacy, that the Department has not done its bit in making sure that local need is properly met. That is why the current system should be scrapped.

Local housing should be managed and funded locally in the interests of tenants and of meeting local housing needs. In my area there is not much local housing because of the right to buy. Day after day, when people come to my surgery or write to me, I am confronted with the appalling situation of having to explain how limited the ability to help is, because the supply is not there to meet their legitimate housing needs. I am sure that many hon. Members share those sentiments.

I began this debate by listing some of the problems with housing in my constituency. The Minister will know that Sutton established an arm's length management organisation in 2005 with the aim of bidding for decent homes funding. I understand that the Department has confirmed that an allocation of £120 million has been made for that purpose, but that money is locked up and waiting for an Audit Commission inspection of the ALMO. Last year, the ALMO narrowly missed the two-star outcome required to trigger the release of the money. Since then, efforts have been redoubled to make sure that it exceeds that standard when the next inspection takes place.

Just last week, Councillor Sean Brennan, the leader of Sutton council, wrote to the Minister for Housing to urge her to exercise discretion and authorise the release of the £120 million now so that work on the borough's decent homes programme could get started. At a time such as this, when the economy needs all the stimulus that it can get, much needed investment could be a vital lifeline for the construction trades in my area and make an enormous difference to the quality of life of many of my constituents.

In conclusion, I am grateful to have had this opportunity to air these issues in the House this evening. Tenants in my constituency face a 6.27 per cent. rent increase this April; 38p in every £1 of their rent will go to the Treasury. There is a desperate need to invest in social housing in my area and to deliver the decent homes standards. On 25 March, tenants from the London borough of Sutton will come to Westminster to lobby for the fair deal that I have been talking about. They will deliver a petition to the Prime Minister at No. 10 Downing street.

My final request is this. Will the Minister, or the Minister for Housing, meet me, my hon. Friend the Member for Carshalton and Wallington and a small deputation-we do not want to overwhelm anyone-of our constituents, so that they can make their case personally and directly and ask the questions on their minds about the issues that I have tried to describe this evening? Better still, will the Minister accept an invitation from me to visit Sutton? He could have a look at some of the issues that I have described in words today, but are often better seen first hand in the constituency. He could talk to some of the tenants whom I have mentioned this evening, and the officials, to discuss the challenges. I hope that the Minister will be able to give a positive response to that request and meet at a time acceptable to us all.

Above all, I have raised this issue tonight on behalf of constituents who want a fair and transparent system of housing finance, a rapid end to a discredited and unfair system-and decent housing.